The damage done is well beyond the here and now of this election. The avarice of Stephen Byers and the other former ministers has pulled up Labour's legacy by the roots and trashed it. Tony Blair and those followers cashing in on their years in office have vandalised their own history books. A searchlight of suspicion shines on those who strove so hard to bring private commerce into public services when they traded on that policy for pelf. Ministers as well as Labour toilers in the field are incandescent with anger.

If a fish rots from the head, Labour's contamination with money was smelled from those earliest days of being "intensely relaxed about the filthy rich". But Tony Blair's behaviour since 2007 defies the ravings of his worst enemies. No conspiracy theorist guessed he would take money for Iraqi oil from a South Korean company – to add to £1m from the Kuwaiti royal family, an estimated £20m from anyone anywhere, £4m for his book, plus properties fit for a Brunei prince. That all this mammon is collected in the name of God is worthy of the faith-based business school of L Ron Hubbard: God can make you very rich indeed. Did Blair go to war in Iraq to get rich quick? Almost certainly not, but the cashflow from American adulation ever since will leave the slur on his tombstone. His friends and colleagues shake their heads in disbelief. They warn him, but he inhabits a stratosphere of hyper-wealth, where their words drowned in the purr of Gulfstreams.

Peter Mandelson, twice scorched for flying too near the rich, still holidayed with Tory tax exiles numbering George Osborne and unsuitable oligarchs among their friends. To Labour people the puzzle is, what they talk about, where's the fun? Why spend precious holidays playing court jester to Rothschilds with obnoxious views? Sun, sea and Petrus can't be enough. Enjoying such company suggests that Blair, Mandelson and others who cross the line are not serious about Labour politics, it's all a bit of a game, a job they do well. Only little people let politics get in the way of pleasure. Worldly and blase, this is politics as a pastime, not a way of life.

Perhaps it is no surprise that Blair's and Mandelson's followers lost their bearings, too. Byers will be anyone's cab for £5,000 a day, boasting of helping Tesco wreck a food-labelling scheme. Geoff Hoon gladly trades his contacts for "something that frankly makes money". Patricia Hewitt is only one of the health ministers and special advisers cashing in with private health companies. Alan Milburn, honorary president of Progress, is paid by a string of health companies as well as Pepsico. Never mind the rules, this is about understanding public service. When it's over, and the Prius and the red box are gone, it's over. There is no entitlement to that world of banqueting and dining with plutocrats which belongs to the job, not the person. Ministerial pensions are excellent, with no need to prostitute one's previous office for cash.

The sheer naivety and idiocy is as significant as the gargantuan greed. Labour people don't understand the world of wealth. They wooed it, they gave it the lowest top rate of tax in the G8 – and it laughed back at them. Was it that laughter that made Blair determined to join them not as a guest but as their equal in his own chateau? At least Gordon Brown only kowtowed to wealth for his Treasury, not for himself. But just wait for the wealth on the Tory front bench: serious money may be in power.

What can Labour do now as an antidote to this poison? The budget is a chance to reverse the idea that Labour never faces down excessive wealth nor makes it pay what it owes in tax. The other half of Mandelson's ill-chosen "filthy rich" remark was "so long as they pay their taxes". Did he ever tell his friends to give up their Swiss tax havens and pay their dues? In this budget, Labour will at least get tougher: anyone caught hiding cash undeclared in havens will pay a 200% fine – twice as much as they do now. As of April, the new regime will name and shame tax cheats publicly, hoping to change a golf club culture that winks at tax fraud. Why not publish a register of non-doms and non-residents to see who doesn't pay tax among those who pontificate on public affairs?

The budget message will be growth and jobs – it is surely right to put £2bn into a green bank, levering in private investment for green industry. Labour need not spell out more cuts than necessary, since spending still rises in this fragile year. It is for the Tories to say what they will cut right away – in six weeks' time. Labour can wait and see how growth, unemployment and Treasury receipts look in the autumn. It's the Tories who must be honest on their immediate cuts.

But if "fairness" is Labour's campaign slogan, the budget must throw down a challenge to the Tories on fairer tax. Stop the poorest tenth paying 46% in tax while the top tenth pays just 34%. YouGov shows 92% of voters think rich and poor should at least pay the same proportion. Take the cap off national insurance so the well-off pay the same proportion as everyone else. Stop them manipulating their tax to redefine income as a capital gains, paying only 18% capital gains tax: this is the time to put CGT back up to level-peg with the top rate of income tax. The ONS shows that 91% of wealth belongs to the top half, most to the top tenth, while the bottom tenth owe more than they earn.

That will get worse without tougher action, so why not a gift tax to stop the loophole that avoids inheritance tax? Go for the Robin Hood transaction tax on banks, without waiting for other countries. On Saturday, low-paid cleaners working for contractors paraded down Oxford Circus, calling on store managers as part of the London Citizens Living Wage campaign, protesting that they can't live on £5.80 an hour. Labour needs a fair pay commission in its manifesto if fairness means anything to set guidelines for excessive salaries as well as for low pay.

Last-minute arguments rage about adding small give aways to the budget: Brown likes his free broadband or free laptop Christmas decorations, but in the current climate these have zero political traction, buying no votes. If voters are returning to Labour, it's because they get the big picture: there will be cuts whoever wins, but Labour is doing more to build industry and save jobs. This budget should challenge David Cameron to match Labour on fairness.